Categorized | seriously dumb

Frugality as Extreme Sport, Part 1

Empty pocket

Broke is back in fashion

In honor of Marc Andresson and Ben Horowitz starting up a new venture capital firm with the stated intention of only investing in startups that understand how not to spend money, today we launch a new series covering the looniest end of the frugality scale, the entrepreneurs and business owners who not only pick up every penny, but crawl into the storm drain to get their mitts on a second penny. Since we’ve clearly entered an era in which “broke is the new black,” we present this ongoing gallery of money-saving champions for whom no horizon is too distant and no low to far to stoop to in their Olympic quest for that one last penny in savings.

And please, if you have any wanton or wacky stories of unhinged managers saving money in loony, goony ways, please feel free to add them to the thread!

Robbing Peter to pay Paul
We’ll start with the grandmaster of foolishness, California Governor Arnold Schwarzenegger and his crew of rodeo clowns in the California Assembly and Senate. Like many states, California six months ago found itself about to be sucked down a financial black hole to the tune of $47 billion. So among the half-measures they took, they cut most state employees’ pay by 10% by furloughing them two days each month. And just this week, failing to actually pass a budget and staring down yet another financial black hole of $24 billion, our rocket science governor cut state employees’ pay by another 5% by adding one more monthly furlough day. But this officially cuts their pay by greater than 10%, so they’re now eligible for unemployment benefits to help offset the entire 15% pay cut. While these benefits are anything but generous, most state employees, since the baseline is their original wages, should be receiving more than the recent 5% pay cut in unemployment benefits for the next three or four months. If, that is, they’re smart enough to apply for unemployment (they are, after all, state employees). And just to put the icing on this stupid cake, many state agencies are now hiring contractors to do the work the furloughed employees are no longer able to do because, well, they’re being furloughed three days a month. And the cost of those contractors? They get paid two to three times what the state employees make. It seems that mathematics — as in counting, addition, and subtraction — has never been one of Arnold’s strong suits.

One man’s garbage is another man’s dinner.
Many moons ago when I was a strapping bairn working my way through the University of Minnesota, I took a job as a baker by basically lying about my baking skills, which were nonexistent. My lie was a sin in letter only because, as it turned out, my complete lack of skills was of no concern to anyone. If it looked, walked, smelled, and croaked like a cookie or a muffin, it was a cookie or muffin and that was good enough. (As a side note, within a month I was a world-class baker. No lie.) Ironically named “Quality Cafeteria,” our little slice of gastronomic paradise served the elderly population living around the southern edge of the state fair grounds and Hamline University. The owner, an elderly gentlemen of eighty-five summers or so, would typically make his appearance about 30 minutes before we opened our doors for lunch. His day always started with a garbage tour. He’d make the rounds of every garbage can in the kitchen to make sure perfectly good food had not been thrown out. If he lighted upon “good” food in the garbage, he’d remove it with great chagrin and noise, indignantly shove it under the nose of the offending party, and either return it to the refrigerator or, in the case of cooked food, plate it up and put it on the service line. It may have been depression-inspired economics, but it was unhinged spectator sport for the otherwise-bored kitchen staff as we’d watch the progress of the garbage-spiced food from serving line to some hapless customer’s mouth. Score!

Sorry to break up this meeting. I’ve got to park my car.
At the height of the dot-com boom, my ad firm pitched a medium-sized, publicly-traded holding company ensconced in a fancy office tower smack-dab in downtown LA. Million dollar views, as they say, for a million dollar company. As we were outlining a plan for an entire investor relations package, the CEO of the company excused himself and mumbled something about parking his car. So he left the room and we ate up 15 minutes burbling something about the Dodgers or Lindsey Lohan. In he came again and we plotted and strategized and otherwise bullshitted our way through 90 minutes of question-and-answer. After the obligatory aprés-meeting chitchat, we packed up our stuff and headed out. Into the elevator we go and, as we’re about to punch the “G” button, a hand stops the elevator door and in rushes the CEO mumbling something about parking his car. Pleasantries are exchanged and, in the course of our conversation, he proudly reveals his money-saving efforts in the undiscovered field of car parking. Now, parking your car in downtown Los Angeles is an expensive affair inspiring all sorts of weird contortions to save a buck, but this guy wasn’t aiming to save money, he was aiming for “free.” He would park immediately across the street from his office tower in a garage that offered the first two hours free of charge (and a buck-fifty for every 30 minutes thereafter to a maximum of something like 15 bucks). So, like clockwork, the CEO of this publicly-traded company was leaving his desk (or meeting or phone call), schlepping down the elevator, trooping over to the parking garage, driving his car out, and driving back in to repark for another “free” two hours. And then back to work. Saving maybe 15 bucks a day for about an hour of his time. There were three of us pitching his company that day and we all had the same thing written on our faces: if the stockholders of the company ever discovered this money-saving, labor-craving innovation, there would be a blood-bath of a sell-off. And if there’s one thing you don’t want to flash like a neon sign in front of a vendor, it’s “dirt cheap.” We, needless to say, quietly declined their business.

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